Ecuadorans Take Fight Against Chevron to Canada

For the past year, Chevron Corp. has refused to pay an $18 billion pollution lawsuit judgment from a court in Ecuador, arguing that the judicial process there was marred by politics, official misconduct and fraud.

So on Wednesday, the company's Ecuadoran opponents moved the case to Canada, a country whose court system enjoys a rock-solid reputation.

They filed suit in Ontario, in a bid to seize enough of Chevron's assets to satisfy the $18 billion judgment from their homeland. If the Canadian court sides with them, they say, Chevron will have a hard time claiming that the court itself is defective.

"We chose Canada to go first because it's a country that has a great tradition of upholding foreign decisions and because its judiciary as a whole is well respected around the world," said Ecuadoran attorney Pablo Fajardo on Thursday, speaking through an interpreter.

He also warned that his legal team would probably file a similar suit in another country in the coming weeks. They are reviewing a list of about 30 countries where Chevron, based in San Ramon, has sizable assets.

"During the month of June, we believe at least one other action will be presented," Fajardo said. "We don't know where yet."

A Chevron spokesman did not returns calls for comment on Thursday. But the company vowed late Wednesday to keep fighting – in any forum.

"Product of bribery"

"The Ecuador judgment is a product of bribery, fraud and it is illegitimate," it said.

The lawsuit seeks to hold Chevron responsible for contaminated soil and water in northeastern Ecuador, where Texaco once drilled for oil. Chevron bought Texaco in 2001, inheriting the suit.

Texaco had pulled out of Ecuador in 1995, after reaching an agreement with the government to clean up a portion of the area. So when Chevron lost the lawsuit last year and refused to pay, the farmers and rain forest tribes suing the company could not seize any of the company's assets – not in their own country, at least. There was nothing left to seize.

Chevron has major assets in Canada: a refinery in British Columbia, oil-sand operations in northern Alberta, deep-sea wells off the Atlantic coast. That fact alone would have made Canada an attractive venue for the Ecuadorans.

But the country's laws governing enforcement of foreign judgments appealed to them as well.

Chevron can try to prevent enforcement by telling the Canadian court that the Ecuadoran judgment was the result of fraud. But any allegations that the company makes must be new and can't have been raised in the original trial, said Canadian attorney Alan Lenczner, who represents the Ecuadorans. Chevron repeatedly raised the issues of misconduct and fraud during the initial trial, as well as the appeal.

The company has filed a racketeering suit in New York against the Ecuadoran lawyers, and has gained access to the attorneys' memos and e-mails. Although Chevron could present some of those documents as new evidence, Lenczner said he doubts they would sway a Canadian court.

"I've read the U.S. proceedings," he said. "Let me tell you, there is nothing new there. It has all been raised in Ecuadoran courts."

Hague tribunal

Chevron also has asked an international arbitration tribunal in The Hague, Netherlands, to wade into the dispute, and that panel has ordered the Ecuadoran government to block enforcement of the judgment. But Fajardo insisted Thursday that the arbitration panel has no authority to block a private lawsuit – in Ecuador or in Canada.

The suit has dragged on for 19 years, with no settlement in sight.

A U.S. diplomatic cable released last year by WikiLeaks said Chevron in 2008 had discussed with Ecuadoran government officials funding a series of "social projects" in return for their help in ending the suit. But nothing came of the effort.

A prominent Philadelphia lawyer who helped bankroll the lawsuit told his colleagues in 2009 that they might persuade Chevron to settle for $700 million to $1.2 billion. But the other attorneys on the team rejected the amount as too low.

Now, the company is adamant that it will not pay. At Chevron's annual shareholders meeting, held Wednesday in San Ramon, Chief Executive Officer John Watson referred to the Ecuadorans' lawyers as "criminals who are trying to defraud your company."